2018 International Conference on Computer, Communications and Mechatronics Engineering (CCME 2018) ISBN: 978-1-60595-611-4
The Development of Renewable Portfolio Standard in the United States
and Its Summary of Practical Experience
Cheng-hui TANG
1,*, Fan ZHANG
1and Xiu-qing CUI
21
State Grid Energy Research Institute Co., Ltd., China
2
State Grid Corporation of China, China
*Corresponding author
Keywords: Renewable portfolio standard, Development in the United States, Renewable energy credit.
Abstract. The renewable portfolio standard (RPS) is a mandatory policy measure to promote the development of renewable energy in many countries. This paper introduces the RPS and its development in the United State. First, the basic concept of the RPS is introduced in this paper. Then, this paper discusses the basic characteristics of the RPS. The RPS development in the United States is introduced with the responsible entity, certificate issuance, certificate transaction, regulatory authority, management assessment, certificate flexibility mechanism, and effect evaluation. Finally, the practical experience of RPS Development in the United State is summarized.
Introduction
In recent years, renewable power has developed rapidly around the world and has become one of the most important sources of energy generation 0. The development trend of some markets shows that renewable power is gradually becoming the mainstream power generation technology, and the development cost is continuously lower 0. The Renewable Portfolio Standard (RPS), also known as the Mandatory Market Share Policy, was first derived from California, and later became one of the main driving forces of renewable energy generation capacity growth. Since the RPS is mainly applicable to the power production industry, it is conceptually equivalent to the later proposed Renewable Electricity Standard. Although the specific content of the RPS system varies from country to country, the basic connotation is the same: that is, a government or a regional government imposes mandatory regulations on the market share of renewable energy power generation in the form of law [3,4]. That is to say, there must be a specified amount or proportion of electricity from the renewable energy source in the total power.
The RPS is a mandatory policy measure to promote the development of renewable energy. It has been widely used in many countries in the world in recent years. The main methods are as follows: First, the government proposes the proportion of renewable energy supply, or quantitative development goals, and set the deadline for achieving the target and the types of effective renewable energy. Generally speaking, this development goal will increase year by year until the long-term goal is achieved. Then, in order to ensure the realization of the renewable energy development goals required each year, it is stipulated that the corresponding responsible entities should undertake certain RPS tasks. The responsible entity is generally a power generation enterprise or a power supply utility. Finally, in order to guarantee the smooth implementation of the RPS, the government supervises the completion of RPS and. The trading mechanism of renewable energy power certificates/green certificates and corresponding incentives and punishments are designed to promote social responsibility and obligations of all social entities.
Basic Characteristics of the RPS System
The basic characteristics of the RPS policy include: First, through the form of laws and regulations, the quantitative development goal of renewable energy in a long period of time should be guaranteed. That is, to ensure the market demand for renewable energy power generation. Second, establishing a market competition mechanism to achieve the most effective development and utilization of renewable energy resources. Third, for the difference between renewable energy generation and conventional electricity prices, the principle of social apportionment should be adopted, fully reflecting the environmental and social value of renewable energy generation.
In the RPS policy, the value of renewable energy is divided into two parts: the first part is the basic part. It refers to the value of electric energy generated by renewable energy in the current electricity market conditions, which is the same as the value of electric energy generated by conventional energy. This part of the value is reflected in the cost of actual electric energy trading, and the beneficiary is the actual electric energy consumer. The other part is the value of renewable energy due to its environmental and other social benefits. This value is reflected in the value of renewable energy in maintaining a clean environment when producing electricity. The beneficiary may be a country or a region. All people have global significance. In the actual trading of electricity, the value of renewable energy to environmental and social benefits cannot be reflected in the existing electricity price system. The RPS has designed a green certificate to represent the value of social benefits such as the environment of renewable energy. A green certificate is a tradable document that can be cashed in. The RPS adopts the principle of social apportionment to solve the value generated by the environmental benefits of renewable energy. The difference between the renewable energy price and the conventional electricity price is shared by the society, that is, it is shared by consumers. On the surface, the RPS is a constraint mechanism, but the incentive mechanism is introduced in the mechanism setting. The constraint mechanism without the incentive mechanism has no vitality.
The essence of the RPS is to develop renewable energy at the lowest cost through market mechanisms. The difference between the RPS and the previous incentive policy is that it is a market mechanism that has relied on government financial support in the past to shift to government-controlled market conditions, creating conditions for large-scale development of renewable energy. Renewable energy has no fair competition conditions in the current electricity market. The environmental pollution of conventional fossil fuel power plants is not fully included in the cost. The environmental benefits of renewable energy generation are social, but its cost. It is the responsibility of individual companies, which is the biggest unreasonable. The RPS uses legal means to spread the cost of clean electricity production of individual companies to all power products, creating a fair market for renewable energy power and conventional fossil fuel power. The green certificate transaction creates a new mechanism for the value of the environmental benefits generated by the enterprise, which is equivalent to a trading market that reflects the value of environmental benefits. Different power producers have a fair commitment to environmental protection by relying on the green certificate trading system. The mandatory requirement in the RPS and the green certificate transaction combine to create market demand and trading methods for renewable energy.
The RPS Development in the United States
Figure 1. Statistics on RPS implemented by states and regions in the United States.
Entity of the RPS and the Type of Technology. The entity of the California RPS is the power enterprise that supplies power to the end users. Before 2010, only three major investors in the power company bear the RPS obligation. Public power companies are excluded. In 2011, the RPS system was amended to include public power companies, including municipal power companies and power cooperatives, in the scope of RPS. At present, power companies that bear RPS obligations accounted for 98% of the state's total electricity sales in 2006. The types of technologies covered by the California RPS system include: photovoltaic power generation, solar thermal power generation, landfill gas power generation, wind power, biomass power generation, municipal solid waste power generation, geothermal power generation (commissioned before September 26, 1996), ocean/wave/tidal Can generate electricity, water and electricity (less than 30MW).
Determination and Allocation of RPS Targets. Method for determining RPS targets in 2003-2010: Based on the purchase and sale of power suppliers in 2001, the annual renewable energy purchase target is to purchase renewable energy in the previous year. An increment is added to the electricity base, where the increment is 1% of the actual purchase of renewable energy last year. Power retailers must increase renewable energy purchases at a rate set by the California Public Utilities Commission (CPUC), at least 1 percentage point per year, and achieve a 10% target by 2010. The RPS target by 2020 is divided into three commitment periods. The committee must announce the amount of renewable energy that each retailer needs to acquire for each commitment period. The first commitment period requires that 20% of retail electricity from January 1, 2011 to December 31, 2013 comes from renewable energy. After 2013, the renewable energy generated by retailers must be able to achieve a 25% target by December 31, 2016 and a target of 33% by December 31, 2020. The government requires power retailers to achieve renewable energy acquisition targets, provided that the state government has sufficient funds to cover the higher cost of renewable energy generation than the average cost. If funding is insufficient to meet the need to acquire renewable energy, retailers may be allowed to appropriately reduce their annual renewable energy acquisition obligations.
energy from the regulatory authorities. Green certificates need to be tracked through the Western Region Power Generation Information System (WREGIS) and can be stored for use in the next three years. On January 13, 2011, the Public Utilities Commission passed a resolution allowing the use of tradable certificates (Trecs) to fulfill RPS obligations. In 2010-2013, the use of the Green Certificate cannot exceed 25% of the total RPS obligation and the price cannot exceed $50. According to the follow-up draft bill, the proportion of Trecs used in 2017 cannot exceed 10% of the total RPS obligation. In addition, in California, the number of certificates corresponding to different types of renewable energy power is the same, that is, there is a competitive relationship between different types of renewable energy.
Administration. The California RPS System is headed by the California Air Resources Board (CARB), the CPUC, and the California Energy Commission (CEC). The power company that is under the management of the CPUC must report to the PUC on the progress of the implementation of the RPS system in the previous year before March 1 of each year, and report on the implementation of the current year on August 1.
Summary of Practical Experience of RPS Development in the United States
The practical experience of RPS System in the United State is summarized as follows:
(1) A sound market conditions and regulatory system is needed for the establishment and successful implementation of the RPS. First of all, there must be a sound electricity market. For example, the initial adoption of the RPS in California was carried out in conjunction with the power restructuring reform, and its power market has been relatively sound. Second, a sound government supervision system is needed. Although the RPS is handed over to the market in the process of fulfilling specific obligations, this is by no means equal to deregulation or regulation. Instead, it requires a legally-administered and efficient regulatory body, which is also a stricter regulation of government management and supervision. Third, there must be a rich base of renewable resources.
(2) The Renewable Energy Obligation Certificate/Green Certificate System is often used as an important part of the RPS policy. Under the framework of the RPS, government regulators, power retailers and renewable energy generators are the main players. The government regulatory department issues the annual renewable energy ratio and the operation of the regulatory system. The electricity retailer purchases as a voluntary entity and submits a green certificate that meets the RPS requirements to the government regulatory authority. Qualified renewable energy generators apply for and sell green certificates based on power generation, while generating revenue.
Summary
This paper introduces the basic characteristics of the RPS system. The RPS development in the United States is discussed detailedly in this paper. The practical experience of RPS development in the United State is summarized in this paper, which could be used as a reference for China's development of RPS.
Acknowledgement
This research was financially supported by SGCC Science and Technology Project “Supply side market mechanism study for renewable accommodation in north-western China”.
References
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